BA 303

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year. The firm reduced its net working capital by $28,000 and incurred net capital spending of $47,900. What is the amount of the cash flow to stockholders for the last year?

$95,700

You are scheduled to receive $5,000 in two years. When you receive it, you will invest it at 6.5 percent per year. How much will your investment be worth eight years from now?

$7,295.71

Outdoor Gear reduced its general and administrative costs this year. This cost improvement will increase which of the following ratios? I. Profit margin II. Return on assets III. Total asset turnover IV. Return on equity

I, II, and IV only

Roberto just deposited $11,500 into his savings account at Security Savings Bank. The bank will pay .55 percent interest, compounded annually, on this account. How much interest on interest will he earn over the next 6 years?

$5.26

Bleu Berri Farms had equity of $58,900 at the beginning of the year. During the year, the company earned net income of $8,200 and paid $2,500 in dividends. Also during the year, the company repurchased $3,500 of stock from one of its shareholders. What is the value of the owners' equity at year end?

$61,100

The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920. The depreciation expense for the year is $46,080 and the interest expense is $11,460. What is the amount of the net capital spending?

$69,800

Ben invested $7,500 twenty years ago with an insurance company that has paid him 6 percent simple interest on his funds. Charles invested $7,500 twenty years ago in a fund that has paid him 6 percent interest, compounded annually. How much more interest has Charles earned than Ben over the past 20 years?

$7,553.52

How long will it take to double your savings if you earn 6.4 percent interest, compounded annually?

11.17 years

The present value of a lump-sum future amount:

increases as the interest rate decreases

Wims, Inc., has sales of $18.7 million, total assets of $13.7 million and total debt of $4.5 million. The profit margin is 10 percent. What is the company's net income? What is the company's ROA? What is the company's ROE?

Net income = $1,870,000 ROA = 13.65% ROE = 20.33%

Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend. The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Positive cash flow to stockholders

PXG Co. has total assets of $8,800,000 and a total asset turnover of 2.38 times. Assume the return on assets is 12 percent. What is its profit margin?

Profit margin = 5.04%

Sunshine Rentals has a debt-equity ratio of .67. The return on assets is 8.1 percent, and total equity is $595,000. What is the net income?

$80,485.65

Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?

SIC

Capital budgeting includes the evaluation of which of the following?

Size, timing, and the risk of future cash flows.

A corporation

is a legal entity separate from its owners

The market value of firm's fixed assets:

is equal to the estimated current cash value of those assets

Paid-in surplus is classified as:

owner's equity

The Sarbanes-Oxley Act

require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results.

One example of a primary market transaction would be the:

sale of 1,000 shares of newly issued stock by Alt Company to Miquel

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE. This sale will occur in the:

secondary market

If a firm has an inventory turnover of 15, the firm:

sells its entire inventory an average of 15 times each year

The primary goal of financial management is to maximize

the market value of existing stock

Andre's Dog House had current assets of $67,200 and current liabilities of $71,100 last year. This year, the current assets are $82,600 and the current liabilities are $85,100. The depreciation expense for the past year is $9,600 and the interest paid is $8,700. What is the amount of the change in net working capital?

$1,400

Croc Gator Removal has a profit margin of 8 percent, total asset turnover of 1.08, and ROE of 14.38 percent. What is this firm's debt-equity ratio?

.66

Which of the following is a valid Excel formula?

= B17

Which one of the following parties can sell shares of ABC stock in the primary market?

ABC Company

Which of the following statements is correct?

Adjustments have to be made when comparing the income statements of firms that use different methods of accounting for inventory

Which of the following terms is defined as the total tax paid divided by the total taxable income?

Average tax rate

A useful way of standardizing financial statements is to choose a _______ year and then express each item relative to that amount.

Base

Which of the following situations is most apt to create an agency conflict?

Basing management bonuses on the length of employment

Cell addresses that are included in a valid formula are outlined in which color?

Blue

Which of the following functions is generally a responsibility assigned to the corporate treasurer?

Capital expenditures

Which of the following functions should be assigned to the corporate treasurer rather than to the controller?

Cash Management

Delectable Parsnip, Inc.'s, net income for the most recent year was $11,441. The tax rate was 23 percent. The firm paid $4,800 in total interest expense and deducted $5,257 in depreciation expense. What was the company's cash coverage ratio for the year?

Cash coverage ratio = 5.19 times

An agency issue is most apt to develop when:

The control of a firm is separated from the firm's ownership.

In response to complaints about high prices, a grocery chain runs the following advertising campaign: "If you pay your child $1 to go buy $32 worth of groceries, then your child makes about twice as much on the trip as we do." You've collected the following information from the grocery chain's financial statements:

Childs profit margin = 3.13% Store's profit margin = 1.56% Store's ROE = 6.39%

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts?

Corporation

SDJ, Inc., has net working capital of $2,310, current liabilities of $5,450, and inventory of $1,225. What is the current ratio? What is the quick ratio?

Current ratio = 1.42 times Quick ratio = 1.20 times

What is the address of a cell in row 27 of column D?

D27

For the past year, Hawkeye, Inc., had a cost of goods sold of $63,382. At the end of the year, the accounts payable balance was $12,889. How long on average did it take the company to pay off its suppliers during the year?

Days' sales in payables = 4.92 times

Bello, Inc., has a total debt ratio of .10. What is its debt-equity ratio? What is its equity multiplier?

Debt-equity ratio = .11 Equity Multiplier = 1.11

Working capital management includes which of the following?

Determining which will be granted credit

All else held constant, the book value of owners' equity will decrease when:

Dividends exceed net income for a period

Which of the following correctly defines a common chain of command within a corporation?

The controller reports directly to the chief financial officer

Which of the following is a capital structure decision?

Establishing the preferred debt-equity level

Common size income statements show balance sheet items as a percentage of current assets.

False

Which one of the following is the maximum growth rate that a firm can achieve without any additional external financing?

Internal growth rate

Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance?

International finance

A firm's liquidity level decreases when:

Inventory is purchased with cash

A7X Corporation has ending inventory of $719,973 and cost of goods sold for the year just ended was $9,935,413. What is the inventory turnover? What is the days' sales in inventory? How long on average did a unit of inventory sit on the shelf before it was sold?

Inventory turnover = 13.80 times Days sales in inventory = 26.45 days on shelf before sold

Which one of the following forms of business organization offers liability protection to some of its owner but not to all of its owners?

Limited partnership

The Moraine Company has net income of $165,850. There are currently 31.85 days' sales in receivables. Total assets are $854,000, total receivables are $147,900, and the debt-equity ratio is .55. What is the company's profit margin? What is the company's total asset turnover? What is the company's ROE?

Profit margin= 0.0979 or 9.79% Total asset turnover= 1.98 times ROE= .3010 or 30.10%

Borland, Inc., has a profit margin of 6.5 percent on sales of $22,600,000. Assume the firm has debt of $8,700,000 and total assets of $15,300,000.

ROA = 9.60% or .0960

A fire has destroyed a large percentage of the financial records of the Inferno Company. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 17.3 percent. Sales were $1,810,000, the total debt ratio was .35, and total debt was $663,000. What is the return on assets?

ROA= .1124 or 11.24%

Which of the following statements is correct?

The primary purpose of the NYSE is to match buyers with sellers

In a general partnership, each partner is personally liable for:

The total debts of the partnership, even if he or she was unaware of those debts

Does each yellow cell require a formula?

True

A private placement is most apt to involve

a life-insurance company

Production equipment is classified as:

a tangible fixed asset.

One advantage of the corporate form of organization is the:

ability to raise larger sums of equity capital than other organizational forms

Probably the least effective means of aligning management goals with shareholder interests is:

automatically increasing management salaries on an annual basis

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

balance sheet

Security dealers:

buy and sell from their own inventory

Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's:

capital structure

The goal of financial management is to increase the

current market value per share

Lookin' Up earns $.094 in profit on every $1 of sales and has $1.21 in assets for every $1 of sales. The firm pays out 45 percent of its profits to its shareholders. What is the internal growth rate?

4.46%

Dove, Inc., had additions to retained earnings for the year just ended of $643,000. The firm paid out $40,000 in cash dividends, and it has ending total equity of $7.38 million. If the company currently has 750,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? If the stock currently sells for $30.80 per share, what is the market-to-book ratio? The price-earnings ratio? If total sales were $10.68 million, what is the price-sales ratio?

Earnings per share = $.91 Dividends per share = $.05 Book value per share = $9.84 Market-to-book ratio = 3.13 times Price-earnings ratio = 33.82 times Price-sales ratio = 2.16 times

Michael's Bakery had $236,400 in net fixed assets at the beginning of the year. During the year, the company purchased $53,200 in new equipment. It also sold, at a price of $22,000, some old equipment that had a book value of $5,900. The depreciation expense for the year was $13,400. What is the net fixed asset balance at the end of the year?

$270,300

Maren's House of Pancakes has sales of $635,400, total equity of $268,000, and a debt-equity ratio of .6. What is the capital intensity ratio?

.67

A firm has net income of $197,400, a return on assets of 8.4 percent, and a debt-equity ratio of .72. What is the return on equity?

14.45%

jPhone, Inc., has an equity multiplier of 1.35, total asset turnover of 1.63, and a profit margin of 7 percent. What is the company's ROE?

15.40%

Computer Geeks has sales of $618,900, a profit margin of 13.2 percent, a total asset turnover rate of 1.54, and an equity multiplier of 1.06. What is the return on equity?

21.55%

Tessler Farms has a return on equity of 11.28 percent, a debt-equity ratio of 1.03, and a total asset turnover of .87. What is the return on assets?

5.56%

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and apply the proceeds to the debt II. Sell the lighting fixtures from the building and apply the proceeds to the debt III. Withdraw funds from Maria's personal account at the bank to pay the store's debt IV. Sell any assets Maria personally owns and apply the proceeds to the store's debt

I, III, and IV only

Which of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?

Increase the protections against corporate fraud

Which one of the following is included in the market value of a firm but not in the book value?

Reputation of the firm

Kaleb's Karate Supply had a profit margin of 8 percent, sales of $26.6 million, and total assets of $8.1 million. What was the total asset turnover? If management set a goal of increasing total asset turnover to 3.5 times, what would the new sales figure need to be, assuming no increase in total assets?

Total asset turnover = 3.28 times Sales = $28,350,000

The Sarbanes-Oxley Act of 2002 has:

essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital:

had to decrease

An auction market:

has a physical trading floor

Corporate shareholders:

have the ability to change the corporation's bylaws.

The daily financial operations of a firm are primarily controlled by managing the:

working capital

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as:

working capital management

A balance sheet shows beginning values of $56,300 for current liabilities and$289,200 for long-term debt. The ending values are $61,900 and $318,400, respectively. The income statement shows interest paid of $29,700 and dividends of $19,000. What is the amount of the net new borrowing?

$29,200

Y3K, Inc., has sales of $7,395, total assets of $3,485, and a debt-equity ratio of .26. Assume the return on equity is 17 percent. What is its net income?

$470.20

Lew's Auto Repair has cash of $18,600, accounts receivable of $34,500, accounts payable of $28,900, inventory of $97,800, long-term debt of $142,000, and net fixed assets of $363,800. The firm estimates that if it wanted to cease operations today it could sell the inventory for $85,000 and the fixed assets for $349,000. The firm could collect 100 percent of its receivables as they are secured. What is the market value of the firm's assets?

$487,100

It is optional to indicate how confident you are in your answer (high, medium, low) before you submit your answers.

False

SmartBook recharge mode can be accessed at any time during a SmartBook assignment attempt

False

To advance the progress completion percentage in a SmartBook assignment, only one question per concept must be answered correctly

False

When conducting a financial analysis of a firm, financial analysts:

Frequently use accounting information

Which of the following is a working capital decision?

How much cash should the firm keep in reserve?

Your instructor may enable two sources of assistance, Hints, and Show Me. Which of these will display a valid formula?

Show Me

Levi had an unexpected surprise when he returned home this morning. He found that a chemical spill from a local manufacturer had spilled over onto his property. The potential claim that he has against this manufacturer is that of a(n):

Stakeholder

For the most recent year, Camargo, Inc., had sales of $538,000, cost of goods sold of $242,590, depreciation expense of $60,900, and additions to retained earnings of $73,300. The firm currently has 20,500 shares of common stock outstanding and the previous year's dividends per share were $1.15. Assuming a 21 percent income tax rate, what was the times interest earned ratio?

Times interest earned = 2.10 times

The Taylor Company has an ROA of 8.7 percent, a profit margin of 8.75 percent, and an ROE of 14.75 percent. What is the company's total asset turnover? What is the equity multiplier?

Total asset turnover = .99 times Equity Multiplier = 1.70 times

After getting some questions wrong, you must click on a resource such as "Learn About This" to learn more about the concept before moving forward.

True

Excel functions are pre-built formulas within Excel

True

SmartBook 2.0 allows you to start your active learning experience by either reading or by jumping right in to start answering questions

True

The most important topics in the text are initially highlighted for you. You can navigate through the highlights by clicking 'Concepts' (forward and back) arrows.

True

The process bar indicated how many concepts you have completed, how many are in progress, and how many are still left in the assignment.

True

Ten years ago, you deposited $5,500 into an account. Five years ago, you added an additional $2,500 to this account. You earned 6.5 percent, compounded annually, for the first 5 years and 5.0 percent, compounded annually, for the last 5 years. How much money do you have in your account today?

$12,808.09

BR Trucking has total sales of $911,300, a total asset turnover of 1.1, and a profit margin of 5.87 percent. Currently, the firm has 18,500 shares outstanding. What are the earnings per share?

$2.89

Twelve years from now, you will be inheriting $60,000 What is this inheritance worth to you today if you can earn 6.0 percent interest, compounded annually?

$29,818.16

Your coin collection contains ten 1949 silver dollars. If your grandparents purchased the coins for their face value when they were new, how much will your collection be worth when you retire in 2065, assuming the coins appreciate at an annual rate of 5.1 percent?

$3,205.64

Your parents spent $7,800 to buy 200 shares of stock in a new company 12 years ago. The stock has appreciated 14.6 percent per year on average. What is the current value of those 200 shares?

$40,023.03

The Conference Center has cash of $7,800, accounts receivable of $15,600, inventory of $48,850, and net working capital of $5,000. What is the cash ratio?

.12

You're trying to save to buy a new car valued at $42,650. You have $40,000 today that can be invested at your bank. The bank pays 4.2 percent annual interest on its accounts. How long will it be before you have enough to buy the car for cash? Assume the price of the car remains constant.

1.56 years

You just won $17,500 and deposited your winnings into an account that pays 6.7 percent interest, compounded annually. How long will you have to wait until your winnings are worth $50,000?

16.19 years

Allyba Dance Supply has total assets of $550,000 and total debt of $295,000. What is the equity multiplier?

2.16

Dellf's has a profit margin of 3.8 percent on sales of $287,200. The firm currently has 5,000 shares of stock outstanding at a market price of $7.11 per share. What is the price-earnings ratio?

3.26

You expect to receive $5,000 at graduation one year from now. Your plan is to invest this money at 6.5 percent, compounded annually, until you have $50,000. At that time, you plan to travel around the world. How long from now will it be until you can begin your travels?

37.57 years

Delmont Movers has a profit margin of 7.1 percent and net income of $63,700. What is the common-size percentage for the cost of goods sold if that expense amounted to $522,600 for the year?

58.25%

Suppose that in 2015, a $10 silver certificate from 1898 sold for $11,700. For this to have been true, what would the annual increase in the value of the certificate have been?

6.22%

Lisa has $1,000 in cash today. Which one of the following investment options is most apt to double her money?

8 percent interest for 9 years

You want to invest an amount of money today and receive back twice that amount in the future. You expect to earn 9 percent interest. Approximately how long must you wait for your investment to double in value?

8 years

A firm has net income of $4,238 and interest expense of $898. The tax rate is 35 percent. What is the firm's times interest earned ratio?

8.26

Which one of the following is a measure of long-term solvency?

Cash coverage ratio

Which one of the following is the correct formula for computing the present value of $600 to be received in 6 years? The discount rate is 7 percent.

PV = $600/(1 + .07)6

Katlyn needs to invest $5,318 today in order for her savings account to be worth $8,000 six years from now. Which one of the following terms refers to the $5,318?

Present value

All else held constant, which one of the following will decrease if a firm increases its net income?

Price-earnings ratio

Sixty years ago, your grandparents opened two savings accounts and deposited $250 in each account. The first account was with City Bank at 3.6 percent, compounded annually. The second account was with Country Bank at 3.65 percent, compounded annually. Which one of the following statements is true concerning these accounts?

The Country Bank account has paid $61.30 more in interest than the City Bank account.

Which one of the following is a correct statement, all else held constant?

The future value is directly related to the interest rate.

Lew has $3,600 that he wants to invest for 5 years. He can invest this amount at his credit union and earn 2.2 percent simple interest. Or, he can open an account at Compass Bank and earn 2.15 percent interest, compounded annually. If he decides to invest at Compass Bank for 5 years, he will:

earn $8 more than if he had invested with his credit union.

Tower Pharmacy pays out a fixed percentage of its net income to its shareholders in the form of annual dividends. Given this, the percentage shown on a common-size income statement for the dividend account will:

vary in direct relation to the net profit percentage.

For the past year, LP Gas, Inc., had cash flow from assets of $38,100 of which $21,500 flowed to the firm's stockholders. The interest paid was $2,300. What is the amount of the net new borrowing?

-$14,300

The concept of marginal taxation is best exemplified by which one of the following?

Mitchell's Grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes.

Which of the following statements is correct?

NASDAQ has more listed stocks than does the NYSE.

The Plainfield Company has a long-term debt ratio (i.e., the ratio of long-term debt to long-term debt plus equity) of .37 and a current ratio of 1.33. Current liabilities are $2,425, sales are $10,555, profit margin is 9 percent, and ROE is 14 percent. What is the amount of the firm's net fixed assets?

Net fixed assets = $9,970.16

Trout Lumber Yard has a current accounts receivable balance of $447,016. Credit sales for the year just ended were $4,950,605. What is the receivables turnover?What is the days' sales in receivables? How long did it take on average for credit customers to pay off their accounts during the past year?

Receivables turnover = 11.07 times Days' sales in receivables/average collection period = 32.96 days